Earning Play “FUL” tonight, a case to study
16Jan2007 Filed under: Backspread and Earnings Author: OptionPundit
I am planning to play FUL tonight and here is the chart of the stock for the past 1 yr/daily:
Notice the areas around earning announcement, the stock has moved roughly by 10% easily after the earning were announced. That’s what I am looking for, large moves. For my spread I was filled for $2.65 credit—>. Based on this trade, the risk to reward looks like this:
How will I make money? If the stock moves above $32.2, my profit is unlimited, to the extent of upward move. If the stock falls below $27.5, I will make $265 (for $235/investment/per spread) which I received as credit for opening this trade. How will I lose money? I will lose the maximum of roughly $235 ($500-$265) which is required as margin, if the stock stays in between $27.6 and $32.2. Other important factor to look at is the volatility. Current volatility is to the tune of 100% which will be crushed tomorrow after the earning announcement. My buy side therefore will hurt me as well (sell side is otherwise).The spreading was simple; the art will be on how do I close tomorrow. Till then, Profitable trading, OptionPundit
Earnings, FUL, large move, Options, speculation, spreads, stocks, trading3 Responses to “Earning Play “FUL” tonight, a case to study”
Leave a reply
About this blog
OptionPundit© (OP) is designed for novice as well as serious option traders. It is a stock & option trading blogsite that is dedicated to the following objectives: read more ⇒
OPN Performance
AP Biz News
- Gov't eyes plan to take ownership stakes in banks
- Euro nations to guarantee bank refinancing
- Investors face more uncertainty as bailout widens
- Is the era of easy credit over for the long haul?
- China looking inward as foreign economies slow
- Palin has mixed record as fiscal conservative
- World Bank to protect poor from economic turmoil
Stay Informed (RSS or Mobile)
Been There, Done That
optionpundit
January 17th, 2007 at 1:52 pm
By MarketWatch
Last Update: 10:31 PM ET Jan 16, 2007
H.B. Fuller quarterly income rises on coatings unit sale (10:11 PM ET) SAN FRANCISCO (MarketWatch) — H.B. Fuller Co. Tuesday evening said fourth-quarter net income rose, as the company recorded a $68.9 million gain on the sale of its powder coatings business, to $75.7 million, or $1.25 a share, from $23.3 million, or 40 cents a share, during the same period in the prior year. Before items, quarterly per-share income was 50 cents, or 48 cents from continuing operations. Analysts polled by Thomson First Call were looking for per-share income of 46 cents. The adhesives, sealants and coatings company said quarterly revenue rose to $395.6 million from $394.4 million in the prior year. For fiscal 2007, H.B. Fuller sees earnings per share of $1.58 to $1.68, while Wall Street is looking for $1.63.
FUL Earnings : Closed Profit - 29.8% profit at OptionPundit
January 20th, 2007 at 2:47 pm
[...] Without waiting for any further fall in the stock, I bought back my short leg of the back spread that I opend last night. As mentioned in the last post here, i had received $2.65 credit. I bot back my sold leg for $1.95 and I have 2 call legs ($30). This might serve as lottery ticket in case the stock decide to come back. With this, it resulted in 29.8% proift for holding for 1 night. Please do note this is a speculative trade, which is not my bread and butter strategy. It is only for accelerating the returns at “certain” time. This is high risk/high reward/loss kind of play. [...]
Simon
February 12th, 2007 at 6:42 am
Optionpundit…why do you prefer backspreads over Straddles oe strangles. An good site to look for movers is http://www.Optionslam.com